US retail’s recent rush to adopt contactless payments
The COVID-19 pandemic has motivated retailers to turn to technology to help their businesses plan better, increase productivity, and service their customers.
Contactless payments are one of the areas that, because of COVID-19, will change forever the way retailers do business.
Safer and faster checkout
These RFID-enabled payments have been available for years but have surged in popularity during the pandemic.
Not only is contactless more hygienic – in the time of COVID-19, no one wants to touch cash that’s been touched by hundreds of strangers – but it also streamlines the entire checkout process.
While the pandemic may have provided a strong push toward a cashless society, customers could still choose to use a traditional payment card, rather than NFC technology, and be safer from virus exposure during the transaction because they are operating the card reader rather than handling cash.
However, because they use radio-frequency identification, contactless payments reduce time waiting in lines.
The “tap-and-go” process generally results in speedier transactions. While the transaction time for a chip-enabled card can take as long as 30 to 45 seconds, a contactless transaction can be as short as 10 to 15 seconds.
Global adoption of contactless payments
Contactless transactions build upon RFID and typically use NFC technology, the foundation for services such as Apple Pay and Google Pay.
Globally, this method of payment is very popular.
The United States, however, has been slow to adopt contactless payments.
In 2018, only 3% of cards in use in the United States were contactless, compared with 64% in the United Kingdom and up to 96% in South Korea, according to global management consulting firm A.T. Kearney.
Even prior to the pandemic, Juniper Research reported that contactless payments would triple to $6 trillion worldwide by 2024, up from roughly $2 trillion this year.
OEM mobile wallet transactions were predicted to increase as banks expanded the use of contactless cards.
In the U.S. market, contactless transaction values were expected to rise at an even higher rate than the global market, reaching $1.5 trillion by 2024, compared with the approximated $178 billion in 2020.
Once COVID-19 hit, contactless payments began to surge.
By August 2020, the global contactless payment market was valued at $ 1.05 trillion by 2019 transaction value, and is now predicted to register a compound annual growth rate (CAGR) of roughly 20.01% between 2020 and 2027.
Today, the global contactless payment market value is expected to surpass $ 4.60 trillion by 2027.
Customers have enough friction getting out to the store today. By offering contactless payments, retailers can provide an efficient, safe method for purchasing goods and services while enhancing the customer’s overall experience.